Section 253 of the Income-tax Act outlines the procedure for appeals to the Income Tax Appellate Tribunal (ITAT) against orders issued by specified tax authorities. Sub-section (1) specifies the types of orders eligible for appeal, including those by Deputy Commissioners and Commissioners under various sections of the Act. However, penalties under section 158BFA were not initially included, preventing appeals against such orders. A proposed amendment seeks to rectify this by incorporating section 158BFA into the eligible appeal categories under clause (a) of sub-section (1) of section 253. Currently, appeals must be filed within 60 days of the order’s communication, a process now streamlined under Faceless Appeal mechanisms. The amendment proposes extending this time limit to two months from the end of the month of communication to align with the new digital practices. These changes are slated to come into effect on October 1, 2024, aiming to enhance efficiency in the appeal process and accommodate the evolving digital landscape of tax administration.
Budget 2024: Rationalisation of the time-limit for filing appeals to the Income Tax Appellate Tribunal
Section 253 of the Act lays down the provisions for filing an appeal with the Income Tax Appellate Tribunal (ITAT) against an order passed by the Joint Commissioner of Income-tax (Appeals), Commissioner of Income-tax (Appeals) [CIT(Appeals)], the Principal Chief Commissioner of Income-tax, the Chief Commissioner of Income-tax, the Principal Commissioner of Income-tax, or the Commissioner of Income-tax. The ITAT is the second appellate authority in the income-tax appellate hierarchy.
2. The sub-section (1) of the said section details the types of orders passed under various sections of the Act against which an aggrieved assessee may appeal to the Appellate Tribunal. Clause (a) of the said sub-section provides that any assessee aggrieved by any order passed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998 or, as the case may be, a Commissioner (Appeals) under section 154, section 250, section 270A, section 271, section 271A, section 271AAB, section 271AAC, section 271AAD, section 271J or section 272A may appeal to the Appellate Tribunal.
2.1 Section 158BFA of the Act is an interest and penalty provision under Chapter XIV-B of the Act for imposition of penalty on undisclosed income for the block period in a case where search has been initiated under section 132 of the Act. However, as the reference to the same has not been inserted in sub-section (1) of section 253 of the Act, an aggrieved assessee cannot appeal against such penalty orders passed by Commissioner (Appeals). Accordingly, it is proposed to amend clause (a) of subsection (1) of section 253 to include the reference of section 158BFA therein
3. As per the provisions of sub-section (3) of the said section, appeals to the ITAT are to be filed ‘within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the PCIT/CIT, as the case may be’. Appeals to the ITAT are generated mainly by orders passed by the CIT (Appeals), which is now through ITBA. In the new Faceless Appeal dispensation, the CIT (Appeals) upload the orders on a day-to-day basis rather than the erstwhile practice of sending a monthly/fortnightly ‘bunch’ of orders to the jurisdictional PCIT. Such an upload amounts to electronic communication to the PCIT. This, in turn, means that the limitation for filing appeal to the ITAT would fall on a daily basis making it difficult for the PCIT and the Assessing Officer to track the same.
4. In view of the foregoing, it is proposed to amend sub-section (3) of section 253 to provide that the appeal before the ITAT may be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.
5. This amendment will take effect from the 1st day of October, 2024.
[Clause 78]
Proposed Amendment of section 253 of Income Tax Act, 1961 vide Finance Bill, 2024
In section 253 of the Income-tax Act, with effect from the 1st day of October, 2024,––
(a) in sub-section (1), in clause (a), after word and figures “section 154,”, the word, figures and letters “section 158BFA,” shall be inserted;
(b) in sub-section (3), for the words “sixty days of the date on”, the words “two months from the end of the month in” shall be substituted.
Extract of Clause 78 of Finance Bill 2024
Clause 78 of the Bill seeks to amend section 253 of the Income-tax Act relating to appeals to the Appellate Tribunal.
Sub-section (1) of the said section provides that any assessee aggrieved by any of the orders passed under various provision specified therein may appeal to the Appellate Tribunal against the said orders.
It is proposed to amend clause (a) of the said section 253 to provide the reference of section 158BFA therein which provides for levy of interest and penalty in certain cases.
Sub-section (3) of the said section provides that every appeals to the Appellate Tribunal is to be filed within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.
It is proposed to amend the said sub-section to provide that the appeal before the Appellate Tribunal may be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.
These amendments will take effect from 1st October, 2024.
